Consider Growing to a Public Company

  • Added:
    Nov 22, 2012
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Conquer the fear! Consider growing to a Public Company
It is not uncommon for many small business owners to shy away from expansionary decisions, or even think of going public. Why? Most of these business owners are scared of the outcome of growing large, and often attribute this fear to the “high risks involved.” Well, the whole idea of business is risk taking, so why indulge in it in the first place, if you choose to give up so soon?  In fact, the truth is, small private businesses and partnerships tend to be at a higher risk of failure. For instance, in the event of a sudden downturn in business activities in a certain industry, larger public companies can easily diversify their resources, and invest in other sectors that are more promising, while small businesses would definitely crumble if such periods become severe and persistent, due to lack of funds. The point here is; the benefits of being a public company are much more than to what meets the eye.

Public companies are those that have the right to request for funds from the general public, usually in the form of selling shares.  This is possible when the company is being listed on the stock exchange market.  There are many advantages of being a public company:

When a company goes public, it shows a sign of maturity and responsibility.  Public companies are liable to many shareholders who are equally owners and share holders at the same time. This results to some level of consciousness in the companies dealings, and the company is compelled to maintain certain high standards in their operations, which in tend to boosts their productivity and returns.

Public companies tend to build a lot of trust with its clientele. The general ideology is, if investors can trust the company with their finances, then the consumers can equally count on them for quality products.

Most companies who grow public tend to realize a drastic reduction in cost. This is because they benefit from larger trade and cash discounts on their purchases, since they have the ability to make larger orders and pay promptly, due to more available funds.

Due to easily accessible capital, public companies can employ very qualified and skilled executives for their companies, who have the potential of using their skills and experience to fetch more returns on the companies’ investments.

Another benefit of being on the stock market is that the cost of capital is relatively lower than those offered at banks, and you do not need to surrender your assets as collateral before getting credit. In fact, it is not compulsory to pay dividend on certain shares, as the holder of such shares can sell them when their value increases (capital gain).

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Rick Patel enjoys writing articles for InterestingArticles.com. View the Rick Patel Author Profile


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